Now buyers can borrow to purchase property at auction

Putative property buyers are now able to borrow to finance up to 70 per cent of their auction purchase, as ICS Mortgages expands its buy-to-let offering ahead of Ireland’s largest ever property auction.

The three-day auction, which starts on May 30th, is being billed as Ireland’s largest, and one of the biggest in Europe, with almost 390 lots on offer. These include a lot comprising 11 holiday homes in Bantry, Co Cork, with a €1 million reserve, as well as two “fixer-uppers” in Rathmines, numbers 13 and 64 Grosvenor Square, reserved at €840,000 and €800,000 respectively, and an income producing chimney in Milltown, south Dublin.

According to Jonathan Fenn, director with BidX1, by Tuesday afternoon some 270 bidders had registered to take part, with a further 100 registrations expected overnight, and another 100 on Wednesday. Registration includes lodging a €4,500 deposit with the auction operator.

It is expected that about 80 per cent of bidders will be Irish, with the balance based overseas.

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“In most cases it is expats living abroad that will bid on something where they are originally from,” said Mr Fenn.

On Monday, the platform reduced the reserve on 59 properties, potentially making them more affordable, based on market feedback. Most of these properties are based outside of Dublin, and include a three-bed property in Ballybunion, Co Kerry, which was cut from €100,000 to €92,000, and an apartment in Brennanstown, Cabinteely, which was cut from €250,000 to €225,000.

“If we feel the reserve is pitched that little bit high to attract the relevant interest to result in competitive bidding, we will make the recommendation to our client to reduce the reserve to give it every opportunity of selling on the day,” Fenn said.

Finance

This month’s auction is also the first at which buyers can come with specific mortgage finance to buy on the day, provided that they have been approved beforehand.

ICS Mortgages, which offers specialist buy-to-let mortgages, now has a product aimed at auction buyers.

The product is very much tailored towards professional buy-to-let investors, with applicants required to have three or more investment properties to qualify. It is open to both individuals and companies, but comes with some restrictions; bids can only be up to a certain amount, while it’s also subject to ICS getting a full and clean title to the property, which also must have no defects. Moreover, applicants must have a minimum proven income of €40,000, which can include a portion of rental income

The loan will be offered on a 15-year interest-only basis, or 20 years for capital and interest repayment options, with finance of up to 70 per cent of the purchase price (65 per cent loan to value for companies and special purpose vehicles) available. Borrowers will be charged at rates of between 4.49 per cent to 5.25 per cent for individuals, and 5.45-5.95 per cent for companies and special purpose vehicles.

The product is available from brokers including New Money, a new joint venture between the Space Property Group, whose interests include BidX1, and financial services group MMPI Financial Services Ltd. According to Eunan O'Carroll, chief commercial officer with Space, New Money will have a referral relationship with entities in the Space group, including BidX1, Hunters Estate Agents and QRE.